How Palm Beach became Sydney's richest suburb

Palm Beach is now the wealthiest postcode in Sydney for the first time outstripping the city's traditionally ritzy eastern suburbs.

Just six years ago, Palm Beach was not even in the top 20 wealthiest postcodes. But residents in the suburb have seen their average incomes leap up more than $100,000 since 2013-14 to about $230,000.

Life's a beach for wealth Palm Beach residents, who have just been named in Sydney's wealthiest postcodes.Credit:Jim Rice

That is a far cry from some of the city's other postcodes, including Auburn ($37,000), where the average resident is declaring about $1400 more a year in income than they were four years earlier according to new taxable income data released by the Australian Tax Office (ATO).

Associate Professor Angela Knox at the University of Sydney said the data was a reflection of wage stagnation and growing inequality.

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"This growing inequality is cause for concern and it's important that we monitor these kinds of trends and factor them into wage-making decisions," she said.

Michael Ossitt, director of Strand Property Group which specialises in advising buyers in the Palm Beach area, said weatherboard holiday homes had characterised the neighbourhood decades ago.

"Really what has happened over time is that those have been replaced by quite lavish and expensive either second homes, but more-so probably primary homes, which is what you're seeing come through in the data now," Mr Ossitt said.

Mr Ossitt said wealthier residents had moved to the area because new technology let them work comfortably further from Sydney and they could afford the higher property prices.

Those residents' decisions to declare Palm Beach as their primary home helped to explain the suburb's rapid rise in income tables, Mr Ossitt said.

"It has really become an exclusive suburb to live for the wealthy," he said.

The people of Palm Beach are the richest taxpayers in Australia.Credit:Jim Rice

But the broader 2108 postcode that includes Palm Beach as well as Scotland Island, Coasters Retreat, Great Mackerel Beach and Currawong Beach has not seen the same dramatic rise in median incomes, which measure how the middle person in the area is going.

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The ATO data shows the median income in Palm Beach is only about $52,000 - 80th in the state - which suggests a significant gap between the wealthiest residents in the postcode and the rest.

But many Sydney suburbs have not done as well as Palm Beach on any measure.

People in the postcode of Fairfield saw income growth of just 5 per cent between 2013-14 and 2016-17, or about 1.6 per cent a year.

And in the 2144 postcode that includes Auburn, incomes crept up only 3.89 per cent over the period to about $37,000 on average.

By contrast the suburbs of Edgecliff, Darling Point and Point Piper remain the state's wealthiest postcode by median income, at about $75,000 and have the second highest average income at just under $190,000. That is about five times what the average resident in Auburn makes.

People in the wealthiest suburbs might be "bankers on boards who are getting extraordinary bonuses that are out of whack with the average level of wage growth which has actually stagnated or in decline in real terms," Professor Knox said.

Those in poorer suburbs lacked the bargaining power to drive their wages up, she said, leading to larger and larger wealth gaps.